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Health insurance premiums have been rising-and consumers will experience another series of price shocks later this year when some see their premiums skyrocket thanks to the Affordable Care Act, aka ObamaCare.

Central to ObamaCare are requirements that health insurers (1) accept everyone who applies (guaranteed issue), (2) cannot charge more based on serious medical conditions (modified community rating), and (3) include numerous coverage mandates that force insurance to pay for many often uncovered medical conditions.

Guaranteed issue incentivizes people to forgo buying a policy until they get sick and need coverage (and then drop the policy after they get well). While ObamaCare imposes a financial penalty-or is it a tax?-to discourage people from gaming the system, it is too low to be a real disincentive. The result will be insurance pools that are smaller and sicker, and therefore more expensive.

How do we know these requirements will have such a negative impact on premiums? Eight states-New Jersey, New York, Maine, New Hampshire, Washington, Kentucky, Vermont and Massachusetts-enacted guaranteed issue and community rating in the mid-1990s and wrecked their individual (i.e., non-group) health-insurance markets. Premiums increased so much that Kentucky largely repealed its law in 2000 and some of the other states eventually modified their community-rating provisions.

States won't experience equal increases in their premiums under ObamaCare. Ironically, citizens in states that have acted responsibly over the years by adhering to standard actuarial principles and limiting the (often politically motivated) mandates will see the biggest increases, because their premiums have typically been the lowest.

Many actuaries, such as those in the international consulting firm Oliver Wyman, are now predicting an average increase of roughly 50% in premiums for some in the individual market for the same coverage. But that is an average. Large employer groups will be less affected, at least initially, because the law grandfathers in employers that self-insure. Small employers will likely see a significant increase, though not as large as the individual market, which will be the hardest hit.

We compared the average premiums in states that already have ObamaCare-like provisions in their laws and found that consumers in New Jersey, New York and Vermont already pay well over twice what citizens in many other states pay. Consumers in Maine and Massachusetts aren't far behind. Those states will likely see a small increase.

By contrast, Arizona, Arkansas, Georgia, Idaho, Iowa, Kentucky, Missouri, Ohio, Oklahoma, Tennessee, Utah, Wyoming and Virginia will likely see the largest increases-somewhere between 65% and 100%. Another 18 states, including Texas and Michigan, could see their rates rise between 35% and 65%.

While ObamaCare won't take full effect until 2014, health-insurance premiums in the individual market are already rising, and not just because of routine increases in medical costs. Insurers are adjusting premiums now in anticipation of the guaranteed-issue and community-rating mandates starting next year. There are newly imposed mandates, such as the coverage for children up to age 26, and what qualifies as coverage is much more comprehensive and expensive. Consolidation in the hospital system has been accelerated by ObamaCare and its push for Accountable Care Organizations. This means insurers must negotiate in a less competitive hospital market.

Although President Obama repeatedly claimed that health-insurance premiums for a family would be $2,500 lower by the end of his first term, they are actually about $3,000 higher-a spread of about $5,500 per family.

Health insurers have been understandably reluctant to discuss the coming price hikes that are driven by the Affordable Care Act. Mark Bertolini, CEO of Aetna, the country's third-largest health insurer, broke the silence on Dec. 12. "We're going to see some markets go up by as much as 100%," he told the company's annual investor conference in New York City.

Insurers know that the Obama administration will denounce the premium increases as the result of greedy health insurers, greedy doctors, greedy somebody. The Department of Health and Human Services will likely begin to threaten, arm-twist or investigate health insurers in an effort to force them into keeping their premiums more in line with Democratic promises-just as HHS bureaucrats have already started doing when insurers want premium increases larger than 10%.

And that may work for a while. It certainly has in Massachusetts, where politicians, including then-Gov. Mitt Romney, made all the same cost-lowering promises about the state's 2006 prequel to ObamaCare that have yet to come true.

But unlike the federal government, health insurers can't run perpetual deficits. Something will have to give, which will likely open the door to making health insurance a public utility completely regulated by the government, or the left's real goal: a single-payer system.

Comments

Yeah, I guess I will just hold off on buying a so-called ACA plan, as Henry outlined. Another consideration, more people between 55 and 62 will seek out disablilty through early social security benefits. Why not? Those who have had their hours cut back, or just have given up on looking for exmployment will find this attractive. Plus, the feds can cut them a check for the headaches the libs in charge have caused them with their never-ending taxing and spending. We don't even have a debt ceiling now; the statists don't want us to really know just how far in debt we are. But take heart, conservatives, the European community according to the AP states that is sooo happy that we haven't (yet) defaulted on our debt-and that we still have Obnamacare! Misery just loves company, I guess!

I believe the author is right.. "ObamaCare" is a hybrid system which will neither be affordable or workable ... I think eventually there will be a "Single Payer" system. - which will cover "basic medical care" - i.e - normal routine Doctor visits and Emergency treatment in Hospital for a specified period of days..
it will require everyone to contribute based on their income - which will be deducted from a person's paycheck... - There will also be private " Catastrophic" coverage with a high Deductible ( say...$10,000..)
Thus making such " Cat" coverage more affordable...

ESTIMATE YOUR 2014 Health Insurance Monthly Premiums
and find out how much you'll pay
and if you'll receive a subsidy from the government
INDIVIDUALS/FAMILIES or COMPANIES: www.coveroregon.cc
Estimates are good for all states even though it says "cover oregon"

Canada already has a single-pay system, where everyone pays as part of their income tax. The result: longer wait times, fewer doctors, and nobody getting stinking rich. On the other hand, no one below the poverty line has to choose between feeding their children or going to the hospital. If you ask me, that's a system that works. The people most likely to complain about it are the people who stand to lose a lot of money from the investment of the premiums, and the stakeholders of the insurance companies, not the people who are in desperate need of affordable health care - the people that the left wing is concerned about.

Wasn't it the Prime Minister of Canada that came to the US for medical help during the winter olympics. Something about the wait was totally unbearable for a routine procedure. Talk to someone in that system. Imagine having to wait a year to reschedule a dental appointment for a sore tooth, because you were 5 minutes late. People need to truly understand what a single payer system is like.

This is about rationing health care. And that means sooner, rather than later, it is going to be about who lives and who dies. Why do you think the actuary realities were ignored? They don't care. Soon enough younger people who have more "value" to society will eventually get the lions share of the care. Older less "valuable" people will have to move over, their time will have come and gone and therefore medical care will be denied. This is what the Ruling Elites are after.
It is just more of the continuing unabated march toward absolute tyranny.

PPACA was health insurance reform, I don't understand why people don't get that. Insurance companies are mandated to spend either 80% or 85% of premiums on care or return those to the policyholder. They have been doing that for 2 years now. Politicians went way out of their way to make health insurers look bad to drum up support for a very flawed bill. Remember, Pelosi indicated they would have to pass it to figure out what was in it. I don't care who you vote fro but if that's how you roll, bad things are going to happen.

Congratulations United States. Higher costs. Higher taxes. Reduced quality. Rationing of care. And by the way in response to Duncan. What happens to all that subsidized health care when we have fewer people paying into the system? Trust me this is not a winner for anyone. Least of all the people who are subsidizing the care for the "people below the poverty line". Unless the intended consequence of this health care "reform" is that everyone live below the poverty line. Another dream of the "left".

When an article is written so far to the right of the actualities, then its time to realize the information is not so accurate. Undermining the Exchanges has no purpose because it is already Law. the irony is that more than 50 million people either cannot afford medical insurance or have pre existing conditions. It is ALREADY DETERMINED WHO LIVES OR DIES FROM THE INSURERS.. Are people so blindsided to now defend the Insurers ? Wake Up America!! I am in the Insurance business.

Why did the insurance companies raise their rates last year 14 percent, when the cost of healthcare only rose 7 percent?
Why are doctors and hospitals makings less and less while insurance companies make more and more?
The reason we need healthcare reform is because insurance companies are making billions while continuing to raise the cost of insurance beyond what anyone should be asked to pay. Let go of your hate for our President and ask yourself one question: if you had a supplier who provided a critically important service to your company, e.g. electrical service or some other utility, and it raised rates at twice the rate of "inflation" would you continue to do business with them? And if there was no other supplier and they were strangling you due to lack of competition, wouldn't you seek relief from the local public utility control commission? Exactly.
The insurance companies have been ***** us and ratcheting down our expectations for so long that we have become numb to any more financial injury. When the government tries to throw us a lifeline to help, half of us believe what the insurance companies’ propaganda machine has spewed out. Stop believing that “big government” is the problem…this is exactly what government is for; to protect us from bullies.

In Response to your post this morning Rick, where do you get your facts from? As another reader pointed out health insurers are required to spend a minimal amount of premium dollars around 85% directly on claims(cost of care/treatment for the patient). One of the largest players in the market is already spending just under 88 cents of every dollar directly on claim leaving around 12 cents on the dollar to pay for administrative costs, commissions to agents, and state premium tax. Maybe you should check into the loss ratios of some of the largest health insurers for the past several years. I am so tired of hearing assumptions that the insurance companies are getting greedy and fat with cash. Do you think they can just jack up rates at any amount they want at any time without any justification? Every increase has to be approved by the insurance commissioner and be backed by actuarial data and claims experience, often times validated by a 3rd party not tied to the health insurer. As rates continue to rise along with the cost of health care, nobody including myself likes to pay those higher premiums but trust me we haven't seen anything yet. Wait until we see more mandates kick in from the affordable care act. How does anyone think it will be more affordable when insurers have to take everyone including the already deathly ill and provide more preventative benefits with no cost sharing from the insured at all? This will make it less affordable and those that didn't have health insurance now still won't be able to afford it so it will be cheaper to pay the penalty for not having it than to pay the premiums for coverage.

Rick, I sell insurance, but not health insurance. I sell commercial fire and liability insurance to businesses. These insurers have underewriting criteria for the properties they will insure, just a health insurers must have criteria for people they insure. Regardless of the insurance risk, it is nothing more than a pool of people paying into a shared account which pays for claims, administrative costs and a reasonable profit for the stockholders who put up the money to start the company. If the government came in to the property & casualty insurance market and required the companies to write insure an office building for the same premium as a fireworks factory, wouldn't you expect to have to pay more into the pool for the risk of now having a fireworks factory as part of that pool? There is nothing different in what is happening in the health insurance industry. They now are required to take risks they can only pay for by collecting more money for the insurance pool. Even if they were making outrageous profits (which they are not), that small amount reducing that to what you consider a reasonable profit would be a drop in the ocean of the increased costs they now face because of the Obamacare legislation. Certainly even you can see this.

I have worked in the insurance brokerage community for seven years. The fact (that has already been said, but conveniently ignored) is that strict controls are already in place to regulate the prices and practices of insurance companies. Yet the left continually beats this anecdotal drum that its the greedy corporations. Insurance companies have run on run on the slimmest of margins even before this law was created. If this law didn't satisfy the carnal desire to neuter them nothing will.
The article succinctly sums up the problem PPACA created. The government ignored all sound acturial and economic wisdom and created a law with an effect exactly opposite of its goal. The number one reason health insurance is expensive is that HEALTH CARE IS EXPENSIVE. This was what PPACA needed to fix but certainly did not do. Instead, they created a law the knew would collapse the system, and to bridge the time between collapse and governmental take over they implemented a wage based means tested subsidy to transfer the wealth to their best constiuents, the growing lower income. Class warfare at its finest.
For this downfall to be averted the someone needs to find a way to stop ALL of this law and foster the ground work for business growth, industry creativity, a reduction in regulation, tort refrom, fraud reform, technology in the medical community, and transparency. More laws will never accomplish this; only a healthy free market system ever has and ever will.

Since all are required to have insurance, the Providers should accept patients only once without insurance and those without should be able to buy it at the providers office before being treated (with ER being the exception )

As a health insurance agent, I find it interesting that some of you think insurance companies will somehow hurt by all this. The opposite is true. Rates are going to sky rocket and the 15% “margin” after the 85% MLR will simply increase profits for insurance companies. After all, 15% of $200 is much better than 15% $150. You see, health insurance companies are simply money movers, there is no great risk. They will continue to stay within the law and keep the 85% as they have for years even before the law was passed. Now they will just make more money because they will increase premiums to keep up with the 85% MLR that is mandated. By the way, a great deal of these increases will not be absorbed by individuals, but by the US Treasury through subsides. It appears somewhere around 60% of people will get a subsidy to buy insurance through the exchange; therefore they won’t feel the increase as much as Uncle Sam and ultimately the tax payers. The question you should all ask yourselves is, where is all this money going to come from???

@Dan - oh, you mean what we had before Obamacare. Yeah, that was working well...anyone with a brain can see greed is in play on the part of the medical profession. Oh, and don't start with the "our medical care will suffer if we don't pay more" argument. Other countries pay less for just as good care, and in some cases better care.

ESTIMATE YOUR 2014 Health Insurance Monthly Premiums
and find out how much you'll pay
and if you'll receive a subsidy from the government
INDIVIDUALS/FAMILIES or COMPANIES: www.coveroregon.cc
Estimates are good for all states even though it says "cover oregon"